Quarterly Energy Comment (November 18, 2015)

by Bill O’Grady

The Market

Over the past year, oil prices fell sharply into the first quarter, remained rangebound from January through March, rallied above $60 per barrel in the spring and early summer, and then slid to new lows in August. Since the August lows, prices have been in a range between the high $30s and $50 per barrel. In November, prices have been weak, testing the low end of the trading range.

(Source: Barchart.com)

It is not unusual for prices to rally into year’s end due to the rise in holiday driving and cold weather. The latter can lift heating oil demand and refining activity. We still expect a rally to develop into New Year’s but it probably won’t move prices much above $50 per barrel.

A much bigger worry for prices develops in early 2016. Refinery maintenance begins soon after the New Year which will depress demand. If production levels remain elevated, prices are vulnerable to breaking into the $30s in early spring.

These reports were prepared by Confluence Investment Management LLC and reflect the current opinion of the authors. Opinions expressed are current as of the date shown and are based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change. This is not a solicitation or an offer to buy or sell any security. Past performance is no guarantee of future results. Information provided in this report is for educational and illustrative purposes only and should not be construed as individualized investment advice or a recommendation. Investments or strategies discussed may not be suitable for all investors. Investors must make their own decisions based on their specific investment objectives and financial circumstances.

QUICKLINKS

CONTACT

EMAIL NEWSLETTER

Sign up for our Email Newsletter

This website is directed to and intended for use by citizens or residents of the United States of America only. The material provided on this website is not intended as a recommendation or as investment advice of any kind, including in connection with rollovers, transfers, and distributions. Such material is not provided in a fiduciary capacity, may not be relied upon for or in connection with the making of investment decisions, and does not constitute a solicitation of an offer to buy or sell securities. All content has been provided for informational or educational purposes only and is not intended to be and should not be construed as legal or tax advice and/or a legal opinion. Always consult a financial, tax and/or legal professional regarding your specific situation. Investing involves risk, including the possible loss of principal.